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An Apple’s Patent

Nov 22, 2011 • Businesses, Demand, Supply, and Markets, Government, Innovation, Thinking Economically • 115 Views    No Comments

This apple has bites rather than bytes but like its namesake it was patented and took years to develop. When its U.S. patent expired in 2008, it had generated close to $6 million for the University of Minnesota and is still producing royalties in Europe.  With Google, the nicotine patch and the V-chip, it was even named one of 25 innovations that transformed the world.

The name of this apple? The Honeycrisp.

And now, the Honeycrisp has become a mother. You might enjoy reading about its offspring, the SweeTango in this PBS report and a New Yorker video and article by John Seabrook.

The Economic Lesson

Just like a new drug or chemical process, an apple undergoes R & D, gets intellectual property protection, generates royalties, and creates competition and knock-off concerns when its patent expires.

Having taken 31 years to develop, the Honeycrisp’s royalty revenue stream is divided among its inventors, a fund for further research, and the department/college where the faculty developers worked.

An Economic Question: Citing the Honeycrisp, explain why you agree or disagree with Edwin Mansfield (1930-1997) a University of Pennsylvania economist who said that seemingly small innovations can have a massive impact.

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